Jakey Technologies has 1,000 folders in inventory that cost $2.00 each.The company's supplier announced that,effective immediately,all future folders will cost $2.20 each.Jakey Technologies should
A)increase the inventory account by $200 and increase the capital account by $200.
B)increase the inventory account by $200 and decrease the capital account by $200.
C)increase the inventory account by $200 and increase the accounts payable account by $200.
D)increase the inventory account by $200 and decrease the accounts payable account by $200.
E)There is no effect from the price change on the accounts of Jakey Technologies.

Question

Quizplus · Accepted Answer

The price change affects future purchases, not the cost of inventory already on hand. Existing inventory cost remains unchanged, so there's no immediate effect on the accounts.

Jakey Technologies Has 1,000 Folders in Inventory That Cost $2